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Advanced Energy Announces 2007 Fourth Quarter and Year-End Financial Results
FORT COLLINS, Colo., Feb. 7 /PRNewswire-FirstCall/ -- Advanced Energy Industries, Inc. (NASDAQ: AEIS) today announced financial results for the fourth quarter and year ended December 31, 2007. Sales were $83.8 million for the fourth quarter of 2007, in line with the Company's revised guidance announced on January 22, 2008. This represented a decrease of 19.8% from $104.5 million in the fourth quarter of 2006, and a sequential decline of 7.4% from $90.5 million in the third quarter of 2007, driven primarily by further declines in the semiconductor equipment industry and order delays by key OEMs. Gross margin for the fourth quarter of 2007 was 39.1%, down from 42.9% in the fourth quarter of 2006, and down from 40.6% in the third quarter of 2007, due to lower sales. Net income from continuing operations for the fourth quarter of 2007 was $4.2 million, or $0.09 per diluted share, compared to $39.4 million, or $0.87 per diluted share, in the fourth quarter of 2006, which includes a tax benefit of $23.5 million related to the reversal of a valuation allowance for deferred taxes. Net income from continuing operations for the fourth quarter of 2006, adjusted to exclude such tax benefit, was $15.9 million or $0.35 per diluted share. Net income from continuing operations also decreased sequentially from $5.9 million, or $0.13 per diluted share, in the third quarter of 2007. Sales were $384.7 million for 2007, a 6.3% decrease from $410.7 million in 2006. Net income from continuing operations for 2007 was $34.4 million, or $0.75 per diluted share, compared to $87.2 million, or $1.93 per diluted share, in 2006. Net income from continuing operations for 2006, adjusted to exclude the tax benefit mentioned above, was $63.7 million, or $1.41 per diluted share. "While 2007 was a challenging year for Advanced Energy, we have seen growth in our solar business including the successful launch of our Solaron(TM) inverter product. However, declines in the semiconductor equipment market pressured our sales once again in the fourth quarter," said Dr. Hans Betz, president and chief executive officer of Advanced Energy. "As we move into 2008, we continue to focus on the diversification of our business and are working to drive down our costs, thereby positioning Advanced Energy for growth and profitability." First Quarter 2008 Guidance The Company anticipates first quarter 2008 financial results to be within the following ranges:
-- Sales of $82 million to $88 million
-- Earnings per share of $0.07 to $0.11
-- Effective tax rate of 32%
Fourth Quarter 2007 Conference Call Management will host a conference call today, Thursday, February 7, 2008 at 5:00 pm eastern standard time to discuss Advanced Energy's financial results. You may access this conference call by dialing (888) 713-4717. International callers may access the call by dialing (706) 634-7937. Participants will need to provide a conference passcode 31990872. For a replay of this teleconference, please call (800)-642-1687 or (706) 645-9291 utilizing the same passcode. The replay will be available through February 11, 2008. A webcast will also be available on Advanced Energy's Investor Relations webpage at http://ir.advanced-energy.com. About Advanced Energy Advanced Energy(R) develops innovative power and control technologies that enable high-growth, plasma-based thin-film manufacturing processes worldwide, including semiconductors, flat panel displays, data storage products, solar cells, architectural glass, and other advanced product applications. Advanced Energy(R) also develops grid-connect inverters for the solar energy market. This press release presents the company's net income from continuing operations for the fourth quarter and year ended December 31, 2006, as adjusted to exclude a tax benefit of $23.5 million related to the reversal of a valuation allowance for deferred taxes. Such adjusted financial information for each period is a non-GAAP financial measure. Net income from continuing operations, also presented in this press release, is the most directly comparable financial measure calculated in accordance with U.S. generally accepted accounting principles (GAAP). A reconciliation of the differences between the non-GAAP financial measures we reference with such comparable GAAP financial measures are included at the end of this press release. Management believes that the non-GAAP financial measures included in this press release provide a useful measure of the company's operating results and a meaningful comparison with the company's 2007 operating results. Management and the board of directors of the company utilize these non-GAAP financial measures, in addition to GAAP financial measures, to evaluate and compare the company's operating performance against internal financial forecasts and budgets, as well as current operating performance. Management and the board of directors, however, do not consider the non-GAAP financial measures to be a substitute for, or superior to, measures of financial performance calculated in accordance with GAAP. The Company's expectations with respect to financial results for the first quarter of 2008 are forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to: the volatility and cyclicality of the industries the company serves, particularly the semiconductor equipment industry, the timing of orders received from customers, the company's ability to realize cost improvement benefits from the global operations initiatives underway, and unanticipated changes to management's estimates, reserves or allowances. Implementation of the board-authorized repurchase of up to $75 million of the company's stock also may affect the anticipated earnings per share set forth in this press release. These and other risks are described in Advanced Energy's Form 10-K, Forms 10-Q and other reports and statements filed with the Securities and Exchange Commission. These reports and statements are available on the SEC's website at http://www.sec.gov. Copies may also be obtained from Advanced Energy's website at http://www.advanced-energy.com or by contacting Advanced Energy's investor relations at 970-407-6555. Forward looking statements are based on information available to the company on the date of this press release. The company assumes no obligation to update the information in this press release.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, September 30, December 31,
2007 2006 2007 2007 2006
Sales $83,836 $104,533 $90,492 $384,700 $410,742
Cost of sales 51,017 59,639 53,765 221,891 235,524
Gross profit 32,819 44,894 36,727 162,809 175,218
Operating expenses:
Research and
development 12,510 12,240 12,937 50,393 44,848
Selling, general and
administrative 16,075 15,535 15,537 62,243 61,037
Amortization of
intangible assets 218 450 201 945 1,833
Restructuring charges (219) 20 556 3,287 111
Total operating
expenses 28,584 28,245 29,231 116,868 107,829
Income from operations 4,235 16,649 7,496 45,941 67,389
Other income, net 1,443 1,060 308 4,810 4,677
Income from continuing
operations before income
taxes 5,678 17,709 7,804 50,751 72,066
Provision for income taxes (1,512) 21,697 (1,948) (16,390) 15,118
Income from continuing
operations 4,166 39,406 5,856 34,361 87,184
Gain on sale of
discontinued assets - 1,000 - - 1,138
Income from discontinued
operations - 1,000 - - 1,138
Net income $4,166 $40,406 $5,856 $34,361 $88,322
Net income per basic share
Income from continuing
operations $0.09 $0.88 $0.13 $0.76 $1.95
Income from discontinued
operations $- $0.02 $- $- $0.03
Basic earnings per share $0.09 $0.90 $0.13 $0.76 $1.97
Net income per diluted share
Income from continuing
operations $0.09 $0.87 $0.13 $0.75 $1.93
Income from discontinued
operations $- $0.02 $- $- $0.03
Diluted earnings per share $0.09 $0.89 $0.13 $0.75 $1.95
Basic weighted-average
common shares outstanding 45,274 44,826 45,248 45,156 44,721
Diluted weighted-average
common shares outstanding 45,758 45,345 45,761 45,704 45,265
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
December 31, December 31,
2007 2006
ASSETS
Current assets:
Cash and cash equivalents $94,588 $58,240
Marketable securities 110,676 85,978
Accounts receivable, net 64,188 74,794
Inventories, net 50,532 52,778
Deferred income taxes 23,696 24,434
Assets held for sale - -
Other current assets 4,289 4,503
Total current assets 347,969 300,727
Property and equipment, net 30,912 33,571
Deposits and other 7,045 2,640
Goodwill and intangibles, net 67,768 65,584
Customer service equipment, net 1,236 832
Deferred income tax assets, net 4,098 8,549
Total assets $459,028 $411,903
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $12,424 $16,310
Other accrued expenses 29,590 36,619
Total current liabilities 42,014 52,929
Long-term liabilities 9,953 3,184
Total liabilities 51,967 56,113
Stockholders' equity 407,061 355,790
Total liabilities and stockholders'
equity $459,028 $411,903
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
RECONCILIATION OF GAAP EARNINGS TO "ADJUSTED" EARNINGS
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, 2006 December 31, 2006
GAAP Adjustment "Adjusted" GAAP Adjustment "Adjusted"
Sales $104,533 $- $104,533 $410,742 $- $410,742
Cost of sales 59,639 - 59,639 235,524 - 235,524
Gross profit 44,894 - 44,894 175,218 - 175,218
Operating expenses 28,245 - 28,245 107,829 - 107,829
Income from
operations 16,649 - 16,649 67,389 - 67,389
Other income
(expense), net 1,060 - 1,060 4,677 - 4,677
Income from
continuing
operations before
income taxes 17,709 - 17,709 72,066 - 72,066
Benefit (provision)
for income taxes 21,697 (23,492)(1) (1,795) 15,118 (23,492)(1)(8,374)
Income from
continuing
operations 39,406 (23,492) 15,914 87,184 (23,492) 63,692
Gain on sale of
discontinued
assets 1,000 - 1,000 1,138 - 1,138
Income from
discontinued
operations 1,000 - 1,000 1,138 - 1,138
Net income $40,406 $(23,492) $16,914 $88,322 $(23,492) $64,830
Net income per
basic share
Income from
continuing
operations $0.88 $(0.52) $0.36 $1.95 $(0.53) $1.43
Income from
discontinued
operations $0.02 $- $0.02 $0.03 $- $0.03
Basic earnings
per share $0.90 $(0.52) $0.38 $1.98 $(0.53) $1.45
Net income per
diluted share
Income from
continuing
operations $0.87 $(0.52) $0.35 $1.93 $(0.52) $1.41
Income from
discontinued
operations $0.02 $- $0.02 $0.03 $- $0.03
Diluted earnings
per share $0.89 $(0.52) $0.37 $1.95 $(0.52) $1.43
Basic weighted-
average common
shares
outstanding 44,826 44,721
Diluted weighted-
average common
shares
outstanding 45,345 45,265
(1) To eliminate the effect of the reversal of the valuation allowance on
net deferred tax assets at December 31, 2006. We assess the
recoverability of our net deferred tax assets on a quarterly basis, in
accordance with SFAS No. 109, to determine if it is more likely than not
that our net deferred tax assets will be realized. Based on our 2006
operating results, our management concluded that it was more likely than
not that the majority of net deferred tax assets would be realized and
recorded a reduction in the valuation allowance of approximately
$23.5 million in the fourth quarter of 2006.
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